{"id":9466,"date":"2018-08-27T13:49:04","date_gmt":"2018-08-27T17:49:04","guid":{"rendered":"https:\/\/www.renthop.com\/content-manager\/?p=9466"},"modified":"2023-07-22T11:37:00","modified_gmt":"2023-07-22T15:37:00","slug":"why-spending-more-than-30-of-your-income-on-rent-is-a-bad-idea","status":"publish","type":"post","link":"https:\/\/www.renthop.com\/blog\/why-spending-more-than-30-of-your-income-on-rent-is-a-bad-idea\/","title":{"rendered":"Why Spending More than 30% of Your Income on Rent is a Bad Idea"},"content":{"rendered":"

Unless you find a low-priced apartment gem<\/a>, your largest monthly expense is most likely rent. Depending on where you live, you could be spending from a few hundred to a few thousand on rent monthly. However, it is typically not your only expense. You must also pay for groceries, internet, phone, insurance, and other bills. Renters should not be spending more than 30% of their gross monthly income on rent.<\/p>\n

Monthly Rental Budget<\/h2>\n

So how much should you spend on rent every month? While the exact number is different for everyone, economists recommend allocating no more than 30% of the gross income toward rent. This includes your utilities as well.<\/p>\n

50\/30\/20 Rule<\/h3>\n

In addition to the \u201c30% rule\u201d, there is another popular budgeting guideline with the same goal of helping you spend less on rent and other expenses. The 50\/30\/20 rule means that you should spend 50% on housing, utilities, groceries, and other recurring costs, 30% on non-essentials and wants like shopping. The final 20% should go toward savings or paying off debt.<\/p>\n

Do Not Spend More than 30%<\/h2>\n

So why is spending more than 30% of your net income generally a bad idea? The biggest reason is that it simply doesn\u2019t allow you a lot of room to spend on other things. Rent is only one of numerous different costs that people incur every month. If you spend most of what you make on rent, how can you expect to afford other things like groceries or gas for your car?<\/p>\n

Limited Savings<\/h3>\n

Not only that, but even if you manage to afford all of your monthly expenses, you will not have much for savings. It’s important to pay your monthly bills and expenses while still building savings. Whether you’re saving for a down payment on a house, a trip, or just building up an emergency fund, you’ll need to put money away monthly.<\/p>\n

Loans with High Interest<\/h3>\n

This could lead to having to take out loans to cover the cost of these unforeseen emergencies, which can dig you into an even deeper financial hole, one that could potentially take you years to dig yourself out from. Also, while the 30% number is a goal for many people, if you want to retire early or you have some lofty goals when it comes to saving, you will likely need to spend significantly less.<\/p>\n

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